Bloggings on Dsyfunctional Government

Immigration Protectionism Costs America Billions

I worry a lot about the future facing America's young adults. Saddled with Dickensian levels of college and grad-school debt, largely unable to find opportunities in their preferred careers, our young fear that they'll be relegated to work in low-paid, dead-end jobs. They and their parents are rightly concerned that the middle class is disappearing, the gulf between the ultra-rich and the poor is growing, and citizens coming of age today may never achieve the American Dream of economic progress.

The country's political, labor and business leaders seem to think the solution lies in restoring our nation's former prominence in manufacturing:

At the Second Annual Conference on the Renaissance of American Manufacturing held in Washington on March 27, speakers from the Obama administration, the Mitt Romney and Rick Santorum presidential campaigns, Republican and Democratic senators, CEOs, and representatives from labor, think tanks and trade associations all agreed: the renewal of American manufacturing should be a top economic priority.

I'm not persuaded. Don't get me wrong, this native Detroiter was glad when the Obama Administration stepped in to save the U.S. auto industry. Despite the protests of a certain "Son of Detroit," the de facto GOP nominee for president, who would have "Let Detroit Go Bankrupt," and now derides the auto bailout as "crony capitalism," maintaining a base level of domestic manufacturing is an important element of our national security.

[If] you look at America’s metropolitan areas, it’s clear that manufacturing-oriented places are relatively poor. The wealthy clusters in the United States are built around things like software, biotechnology and medical devices, higher education, finance, and business services. Places like California, Minneapolis, Seattle, and the Northeast corridor are far richer than the factory-oriented Rust Belt and Southeast.

Rather than overemphasize the rebuilding of its industrial base, America should play to its true strengths. We are the "crazy ones" who "think different", the dreamers (and DREAMers), the visionaries and innovative problem-solvers. Although we've fallen behind in the STEM fields, and must therefore refocus our emphasis on math and the sciences, we are blessed as a nation with an abundance of creative savants who color outside the lines. Our technology dazzles and transforms the world as Hollywood entertains it.

These strengths illustrate the fundamental economic principle of comparative advantage -- do only what you do best and let others do their own best thing. It works domestically, for example, when companies make the "buy or build" decision and choose to focus on core competencies. It would work as well in the global economy if trade were truly free and fair, protectionism were eliminated, and guarantees of minimum labor standards and trade dislocation payments were universally achieved.

If America played to its strengths, our leaders would promote basic research and development, and generally decline to let government pick winners and losers. They would recognize that service industries today account for almost three-fourths of all American jobs, and that the upside potential for better-paying jobs lies more in services than in manufacturing.

In the United States, services increasingly dominate the economy. Employment in this sector has risen steadily since the 1960s, with 70 percent of Americans now working in service industries. And America already exports more services than any other country in the world, even more than the next two competitors combined. In 2011, that amounted to $612 billion exported in services, up 10.1 percent from 2009, and up 136 percent since 1991.

Still, there is great untapped potential for more, since all of these exports are being sold from a tiny share of all the American companies that could participate in the global marketplace.

Steel protectionism is another culprit. Our would-be trading partners have seen America (the leading proponent of free trade) as behaving hypocritically when President George W. Bush imposed tariffs on imported steel in 2002 and again when Congress enacted and President Obama signed the American Recovery and Relief Act in 2009 (with its "Buy American" requirements to purchase iron, steel, and manufactured goods for use in public construction and public works projects).

Global trade in steel and farm products are important to be sure. Lowering these trade barriers globally or regionally (while providing trade adjustment assistance and retraining for displaced workers) would be beneficial. It would allow American consumers to purchase more goods at lower cost. The real promise of American prosperity lies, however, not so much in eliminating barriers to trading tangible commodities, but rather in exploiting our lead in the international trade for services.

The Times'Catherine Rampell in sleuthing out the cause for global restraints on trade in services concludes her article by identifying the prime culprit:

Perhaps the most basic constraint is not abroad but here in the United States, which has relatively tight immigration controls. Services often require workers to travel freely across borders. Asking India to allow American consultants to enter and leave Delhi at will is difficult if the United States cannot — or, more accurately, will not — reciprocate. Economists acknowledge concerns about freer trade displacing some American workers. But they say the United States would nonetheless have a net gain in jobs if borders everywhere were more open.

“We need to have a visa policy that allows businesses to operate efficiently at home and abroad, and that allows all professionals to be able to move back and forth between corporate offices,” said Jeffrey J. Schott, a former trade negotiator and now senior fellow at the Peterson Institute. “If we don’t, why would anyone else?”

If demography is destiny, the U.S. economy may be in the midst of a decades-long slowdown. The U.S. labor force is growing at about half the rate it was 20 years ago; according to recent projections by the Bureau of Labor Statistics, it will continue to expand at a slightly lower pace through 2020. . . .

“In the end, what an economy is depends upon how many bodies you have,” said Anthony Carnevale, an economist and director of the Georgetown University Center on Education and the Workforce.

Carnevale added that if the diagnosis for what ails the economy is the size and quality of the workforce, that may be good news, at least compared to theory that the biggest problem is foreign competition. “To the extent this is a domestic demographic problem, it’s more in our control,” he said. “We can’t blame the Chinese for the quality and quantity of our domestic labor force.”

The U.S. will only correct its trade imbalances, redouble the nation's sizable lead in the global trade for services, and create high-paying U.S. jobs for present and future generations, by modernizing our creaky, crotchety immigration laws.

About The Author

Angelo A. Paparelli is a partner of Seyfarth Shaw LLP. Mr. Paparelli, with a bicoastal practice in Southern California and New York City, is known for providing creative solutions to complex and straightforward immigration law problems, especially involving mergers and acquisitions, labor certifications and the H-1B visa category. His practice areas include legislative advocacy; employer compliance audits and investigations; U.S. and foreign work visas and permanent residence for executives, managers, scientists, scholars, investors, professionals, students and visitors; immigration messaging and speech-writing; corporate policy formulation; and immigration litigation before administrative agencies and the federal courts. He is frequently quoted in leading national publications on immigration law. He is also President of the Alliance of Business Immigration Lawyers, a 30-firm global consortium of leading immigration practitioners. Paparelli?s blog and a comprehensive list of his many immigration law articles can be found at www.entertheusa.com. He is an alumnus of the University of Michigan where he earned his B.A., and of Wayne State University Law School where he earned his J.D. Paparelli is admitted to the state bars of California, Michigan and New York.

The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.